Time to end stigma on mental health for income protection plans

People have historically been reluctant to discuss mental health problems, given the stigma associated with them. But as we head towards Mental Health Awareness Week – the Mental Health Foundation’s annual campaign to promote awareness of mental wellbeing taking place on 16-22 May – attitudes are changing.

In February, the Government responded to the recommendations of the Mental Health Taskforce by pledging an extra £1bn a year for the NHS to support people with mental health problems. More recently Prince William, Prince Harry and the Duchess of Cambridge have been posing for the cameras to promote Heads Together, a campaign to end the stigma around mental health.

So with the public apparently becoming more at ease with mental health issues, could income protection plans be marketed more on their ability to cover such conditions?

A quick glance at last year’s claims statistics shows mental health conditions were a popular reason for policyholders to claim on income protection plans. Several firms, including Aegon, Zurich and Aviva, saw mental health conditions accounting for around a third of their income protection claims in 2015. Even among providers that experienced higher claims for other conditions, mental health issues were still one of the most common reasons for payouts. Put all that together and there is a strong case for promoting income protection plans on the back of their mental health benefits, especially as these are not catered for by critical illness cover. Like many things in life, however, it is not that simple.

“It won’t happen to me”

All the usual barriers that prevent people from taking out income protection plans do not disappear just because the industry emphasises that mental health conditions are covered in addition to physical causes of incapacity.

Plan Money director Peter Chadborn says:“One of the big problems is people think ‘it won’t happen to me’ and that is magnified when it comes to mental health because they don’t want to talk about it. But that’s why the claims statistics are so powerful. They show income protection plans include such issues, hopefully removing some of that sentiment.”

According to Cirencester Friendly head of marketing Rebecca Young, the perceived stigma surrounding mental health, combined with the worry of getting into financial woes, means many are putting their health even further at risk by either trying to deny their situation or by returning to work too early.

The Adult Psychiatric Morbidity Survey 2007, published by the University of Leicester in 2009, estimates a quarter of the UK population will experience some sort of mental health problem in a year. Because every case is different and income protection claims for mental health conditions are high, insurers need to be cautious and base their decisions about providing cover and how much it will cost on detailed underwriting.

Aviva income protection product manager Julie Higman says mental health conditions can range from moderate depression up to bipolar disorders, so everyone needs to be looked at as an individual case.

Royal London senior product development manager Jennifer Gilchrist says, in general, mental health is covered by income protection policies under an own occupation definition, which is less onerous than some policies used to be.

“In the past there could have been policies which had activities of daily working and some mental health policies had exclusions. Now the industry will provide discounts where there are exclusions – if they go for exclusions most providers will give customers the right price for it,” she says.

More than money

Insurers are also more likely to offer practical and emotional support, not just financial help. This is something advisers could make their clients more aware of. Second, medical opinions and counselling services are just two examples of additional benefits that may be provided by income protection plans.

Higman says the focus on early intervention and rehabilitation in the group income protection market has helped people get back on their feet and into work again. This “hands on” approach has filtered across to the individual income protection market in recent years.

However, some people are not aware their policy covers mental health conditions. This was the case with an Aviva policyholder signed off work for two weeks with stress and anxiety. “He phoned us out of courtesy to tell us he was signed off sick and didn’t think he’d be covered under the policy,” says Higman.

The policyholder was on a waiting list of two to three months to receive counselling on the NHS but Aviva arranged for him to receive psychological therapy within a week. “It’s not just about the money; the support offered to customers can be key to their recovery,” she says.